2006 Gift Card Study

The Office of the Comptroller of the Currency, which
oversees national banks, thought consumers needed more information
on fees and terms, too. In August 2006 it issued guidelines
for national banks that are selling gift cards, emphasizing
the need for disclosure of policies and fees both on the card and
on a separate brochure to be handed out with the gift card. The
gift card itself must have the expiration date; the amount of the
monthly maintenance fee, dormancy fee and any other fees; and additional
information for customer service, including a toll-free number or
Web site address.

The ride-along printed information (which might be
as simple as a receipt-style slip of paper) must include several
bits of information.

Disclosure for gift cards issued
by national banks:



The name of
the issuing bank.



Other fees
(replacement, balance inquiry, cash redemption,
etc.).



How to replace
a lost or stolen card.



How to track
balances, "split payment" information
(whether payment for a transaction can be
made with the gift card and another form of
payment such as cash or a credit card).



How to resolve
problems with the card.



Names of merchants
where the card can be used.



When the issuer
can change the terms of use.

"Simon Mall has good gift-card disclosure," says Horne.
"It's much clearer; it articulates just what's going to happen.
They've just taken the lead. They've said, 'We want these fees,'
and they professionally provide an understandable disclosure statement."

States try to help the consumer
Not surprisingly, Simon Property Group, the nation's largest operator
of retail malls, has been at the center of the gift-card-fee-and-expiration-date
discussion. A number of states have passed laws that forbid expiration
dates and fees on gift cards. The states are: California, Connecticut,
Louisiana, Maine, Maryland, Massachusetts, Nevada, New Hampshire,
North Dakota, Oklahoma, Rhode Island, Vermont and Washington. However,
their jurisdiction over gift cards issued by national banks, which
are regulated by federal law, is being challenged.

Simon Property Group, whose cards are prepaid Visa
cards issued by MetaBank, won a victory over New Hampshire's attempt
to forbid its dormancy fees. New Hampshire law does not allow expiration
dates or fees on gift cards. Simon challenged the state law in a
2004 suit, saying federal banking laws supersede state laws. A federal
district court judge ruled in August that since the Simon gift cards
are issued by national banks, they come under federal banking laws,
which at present do not prohibit fees and expiration dates.

Similar suits have been filed in New York, Connecticut and Massachusetts. The New York suit resulted in Simon changing its gift card program so that the expiration date is now 13 months after the card is issued, up from six months. The other suits are still pending.

Bankrate.com's survey reflects the effects of these
changing laws, too. Target plastic gift cards, for example, have
no expiration date in some states and, in others, gift cards expire
two years after issue date.

E-gift cards stay 'e'
Of the seven electronic gift cards Bankrate surveyed, only the J.C.
Penney card can be used to purchase merchandise in stores. All the
others -- Wal-Mart, Costco, Target, Macy's, Bloomingdale's and Kohl's
-- can be used only online or for catalog purchases. The Target
e-GiftCard can be used at Amazon.com as well. Delivery is via e-mail
and all deliver within 24 hours. Only Target's e-GiftCard has an
expiration date: 15 years from date of issuance, subject to state
laws. None of these retailers charges other fees for their cards
or for their use.

As the world of gift cards continues to grow, it will also continue to change, responding to consumer wishes and demands.